This news is rather old, but please bear with me: the World Bank announced four weeks ago that its funding for renewable energy and energy-efficient projects and programs in developing nations increased by 87 percent over the past fiscal year. For the year ending June 30, 2008, the World Bank had committed a total of $2.7 billion (or so says its press release) to 95 projects in 51 countries, with two cross-border projects. Almost a third of this was funneled into hydropower projects, and about $476 went to renewable energy projects (this includes solar, wind, biomass, etc.). There was no word on how much of this $476 went to solar, although the press release did mention a solar-thermal project currently underway in Egypt. Granted, the World Bank is one of many sources of funding for budding energy programs in developing nations, yet its status as a high-profile lender of capital amplifies the magnitude of its movements and announcements, no matter how small. And while the announcement is more of a pat on the back than anything, it’s a positive sign that the high energy prices and power outages that have long plagued the developing world are being addressed with accelerated urgency. However, in light of the current financial and banking crisis, the question of how lending capital to support renewable energy—and especially solar—programs in places that can’t necessarily afford them is probably going to be unavoidable. Getsolar will keep its eyes and ears peeled for some answers.

While we’re all keeping an eye on the economy, I thought I’d review again a few of the main factors that go into the pricing of a solar energy system. How do things look for 2009? Whether solar makes financial sense for you will depend largely on the following:

(1) Cost of system and installation: OK, this one is obvious. But it’s worth re-emphasizing. The lower the installed costs for your system, the more return you’ll see on your investment. Note that, on average, the PV module (the solar panel itself) represents about 50 to 60 percent of total costs. Note, too, that costs are usually expressed in dollars per installed watt ($/W). So, if you were to install a tyical 3-kW residential system, and managed to pay $9.00 per installed watt, the total cost of your system would be $27,000. This is before taking into account of rebates, tax breaks and other incentives. Which brings us to…

(2) Government incentives: Generally speaking, currently solar power represents an attractive investment only when government incentives are available to the buyer. This is because, for the time being, PV systems are relatively expensive. Compared to conventional electricity from the grid, electricity generated from PV systems is, on a per kWh basis, more costly. Recently, Congress provided some much-needed guidance by extending the investment tax credit. In short, this means that businesses and individuals will continue to be able to take federal tax credits on the purchase of qualifying renewable energy technologies. Beyond this, a growing number of state (and municipal) governments are offering support for solar–many in the form of cash rebates. While there are valid concerns that a souring economy will put a damper on the funds available, we believe the longer-term trend is in the direction of increased support for alternative forms of energy, like solar.

(3) Real world conditions: The main engine behind solar energy is, duh, the sun. The overall performance of your system will depend a large part on your location and the orientation of your roof. South-facing roofs are ideal, as are locations that consistently receive a lot of sunshine. Note, however, that solar can still make sense even in places where the weather isn’t perfect. As long as there’s a decent amount of sunlight, you should be in the clear. Our family of solar professionals offers a wealth of information. And the best part is that they all possess local knowledge. To figure out if solar is a good fit for you, fill out a brief info sheet and we’ll get you started.

(4) Cost of financing: Awhile back I wrote a really basic overview of three approaches to financing. I won’t rehash the whole thing here. Suffice it to say, the lower your monthly interest rate or monthly lease payment, the better your financial picture. If you plan well and are able to get good terms, the montly payments on your solar energy system can be lower than your former utility bill. In other words, you’ll be saving more money on your electric bill than you’re paying out each month for your solar panels.

(5) Cost of conventional electricity: First and foremost, solar energy systems derive value by enabling you to reduce the amount of money you pay to your electricity utility. As a rule of thumb, the larger your utility bill, the more you stand to gain by installing a solar energy system. Going further, it’s important to keep an eye on electricity price inflation. The more expensive conventional electricity gets relative to other goods and services in the broader economy, the more attractive solar energy will be. By enabling you to reduce the amount of electricity you purchase from your utility each month, PV panels will help shield you from this sort of price inflation.

In sum…

It’s probably a little too soon to predict what 2009 will bring for those interested in purchasing solar energy system. Retail prices on solar modules reflect a progressive, downward trend. If the market goes soft in 2009, some manufacturers and retailers may markdown modules to help move inventory. If this happens, it would naturally be good for buyers. On the federal tax level, there seems to be continued support for those purchasing renewable energy systems, but rebate programs may see their funding reduced–to the detriment of interested buyers. I can’t really comment on the real world conditions… I mean, maybe 2009 will be an incredibly sunny year? On the financing front, I’ll continue to argue that, if they’re behaving rationally, lending institutions should be jumping on the opportunity to help any credit-worthy individual purchase a solar energy system. Such systems have the potential to lower an individual’s monthly payments, which should leave them with more cash to pay down their loan(s). Of course, in light of the credit meltdown, it’s pretty clear lenders aren’t exactly in the mood to be offering great terms (if they’re lending at all…). And, finally, energy price inflation is a trend that doesn’t really have much bearing over the course of a single year. In the long run, electricity prices are likely to continue their annualized increase of about 5 percent.

Please feel free to post any questions or comments.

These are unstable times and the recent performance of solar stocks seems to have everyone suddenly concerned about the future of the industry that mere weeks ago seemed to be on a spectacular rise. So I wish everyone with these doubts could have wandered the halls of San Diego’s convention center last week: over 400 exhibitors and 23,000 visitors jammed the halls for three days. Seriously, standing room only. Considering that the attendance at SPI 2007 was just shy of 10,000, this is proof of the much-vaunted boom in the solar marketplace.

The passage of the ITC extension has incited a fervor that even our current economic crisis can’t cool. Which is not to say the crisis, or its potential impact on the solar industry, was being ignored–far, far from it. Conversation almost always rounded back to that issue. But if the ITC had not been passed before this conference, I think the discussions of our solar future would have had the grim tone of survival strategizing rather than the confident optimism I saw expressed by so many different players on the solar scene, from new tech designers all the way down to the laid-off Wall Street-ers scouting the job market.

We at GetSolar were pleased to see how positive the response was to the value we represent both to installers and consumers. We were kept busy talking interested show participants through the GetSolar process and explaining our role in the expanding market, but we made time to get out there and explore some of the hundreds of other exhibits as well. Doing this gave us the opportunity to learn about new technologies (like concentrated solar thermal integrated with PV in a single unit); to get great insight into solar processes (like how cells are actually rolled out in production); and to get some feedback from those installers, with whom we already have relationships, on how they like working with GetSolar.

On the night of the show that was open to the public, we met folks who covered the whole spectrum of interest in solar: just walking by and saw the sign, done a bit of research and not sure it’s right for them, done lots of research and now looking for the right installer, already installed and looking at advances in the field…and all the gray areas in between.

The incredible turnout at this show says a lot about solar in America. Everyone’s waiting, of course, to see if the President we elect in November will take solar’s potential and transform it into the valuable piece of the economy and of our energy future that we all know it can be.

Governor Schwarzennegar, who delivered an address the night before the conference officially kicked off, spoke passionately about his belief in the future of solar and about how the current administration has bridled its momentum so far. Once the bit is off, he made clear, California will leap ahead, eager to continue to provide the kind of leadership on solar legislation and integration that it has to date. Considering that we spoke with solar players from places as diverse as Montana, South Carolina, Texas, New Hampshire, Washington and Oklahoma (aside from the more usual suspects, and not to mention Europe), it looks like the mometum is building nationwide. The planners have their work cut out for them: it won’t be easy for Solar Power International 2009 to cap this show.

For a country so abundant in sun, Pakistan has been slow to foray into the ever-expanding group of nations adopting solar energy. Yet, for a country so recently initiated, Pakistan appears to harbor some pretty big solar aspirations. It already boasts its first solar-powered base station (Base Transceiver Station, or BTS site) for mobile phone networks, the product of a joint effort between multinational telecommunications corporation Huawei Technologies Co Ltd. and Pakistani telecom operator Warid. Karachi’s Hamdard University has also recently laid the stone foundation for the university’s—and perhaps Pakistan’s, although the article doesn’t clarify—first solar energy laboratory. Add to that former Pakistan Engineering Council chairman Jameel Ahmed Khan’s statement that solar energy is the country’s only solution to meeting increasing energy demands, and it’s quite possible that we will witness the emergence of another voracious consumer—or maybe prolific producer—of solar technology over the next decade.

The causes for this newfound interest in solar energy are nothing we haven’t seen before, particularly in developing nations. Pakistan, with its sun-baked wide expanses of land and mountains, is well-suited to the widespread adoption of photovoltaic systems. It’s also anxious to decrease dependence on oil and natural gas, and to develop a renewable energy source to the point where the technology becomes affordable to a broader base of its citizenry. The country’s growing numbers of cell phone subscribers highlight the problem of poor telecommunication links outside of the city, where electricity is scarce and access to a grid is not guaranteed, a dilemma Huawei and Warid hope to solve by turning to the self-sufficiency of solar power.

It’s still a bit early to tell, but do you think Pakistan looks like an up-and-coming heavyweight in the world of solar? Granted, the Pakistani solar industry still has a bit of a ways to go, in terms of technological and economic capital, and is still in the giddy stages of its nascence. But a lot can happen with the right initiatives, enthusiasm and intelligent investment.

Ah, what a difference a few weeks can make… For solar energy enthusiasts like us, there has been both good and bad news. Massive volatility in the market has left no sector of the economy untouched. Banks put the kybosh on lending. Otherwise-healthy companies found it harder and harder to raise funds by issuing debt. And, when panic hit the stock market, the value of companies’ equity dropped like a rock. Combined with a worsening outlook for the U.S. economy, these events clearly constitute the bad news.

The good news came (believe it or not) from Washington. Lawmakers finally voted to extend federal tax credits that make it more affordable to purchase renewable energy technologies like solar panels and solar water heaters. Beyond the financial benefits brought to individuals, the new legislation brings a degree of much needed certainty to the marketplace. For the past few years, solar technology firms have had to use guesswork when forecasting future demand. Now, with the eight-year extension, the industry can breathe a little easier knowing what will be available to their customers–both residential and commercial.

All things considered, how do recent events square with the future prospects of the solar industry? And what does this mean for consumers? Well, it’s far from clear–and I’m far from being an expert. (I won’t let this won’t keep me from offering a few short observations, however.)

First, solar currently makes financial sense only when it’s combined with some sort of incentive, like government rebates or tax breaks. Should the current economic downturn evolve into a prolonged recession, there’s a chance that state lawmakers would feel justified in cutting current incentive programs. This would of course reduce demand and hurt sales–an bad outcome for consumers and firms alike.

Second, the link between the price of oil and the demand for solar energy is murky at best. In broad terms, this is because very little of U.S. electricity demand is met by oil. Thus, arguments that a dip in the price of oil might reduce the incentive to pursue alternatives are, in my opinion, a little shaky. In simplest terms, oil and solar panels are not substitutes–at least not yet–so regardless of where the price of oil goes, investors and researchers will still be looking to develop the cheapest and most efficient solar technologies. Given where oil prices are heading, this is a check in favor of solar.

Third, in many ways the near-term prospects for the solar industry come back to the purchasing habits of the consumer. It’s no secret that we Americans don’t shy away from debt. It’s also no secret that solar panels are expensive. Given the on-going fallout from years of loose lending practices, it seems that the era of cheap money and easy credit may be over. In this light, it’s unclear whether U.S. consumers will be able and willing to take out a loan for a pricey PV array in the coming year or so.

Finally, I simply want to note that we strongly believe the long-term prospects for solar manufacturers and solar consumers are bright. Yes, there will be hiccups in demand and bouts of consolidation and failure in the market. At the end of the day, however, firms and individuals will still need to borrow–and solar energy will continue to improve to the point where it provides a good rate of return with relatively low risk. Thus, we believe that ultimately the proposition of energy that is clean, efficicent and affordable will win out.

A professor at the University of Sao Paulo is piloting a project that uses the sun to power self-contained wi-fi units, in hopes of ultimately delivering free wireless internet to poor communities lacking proper power plugs and internet infrastructures. Professor Marcelo Zuffo, the Interactive Electronics Coordinator of the University of Sao Paulo, is testing his creation by attaching prototypes—each of which consists of a solar panel, a motorcycle battery and a circuit—to lampposts around campus.

Zuffo’s solar project depends on a mesh internet, a network comprised of the individual wi-fi units, which relay information among themselves to connect to a larger internet network. While the project is still in its nascent stages—Zuffo says that currently the units provide “two days of full internet coverage”—the professor is shooting for expanded coverage (to ten days) and more miniaturized units. While Zuffo’s original motivation was to provide schools with internet access, solar wi-fi has a number of other potential applications, such as low-income neighborhoods, parks and perhaps even a boulevard of cafes and shops. Could we feasibly take advantage of this technology?

As history tells us, Zuffo isn’t the only person to have thought that solar wi-fi was a good idea. An ill-fated solar wi-fi project in St. Louis Park, a small city in Minnesota, can give us a point of comparison and hopefully teach us what not to do, should we wish to adopt solar wi-fi ourselves (assuming, of course, that Zuffo’s project succeeds).

The St. Louis Park project, which used over $1 million worth of equipment, was given the axe earlier this year after it appeared that the wi-fi network was not functioning well. System tests and inspections from city officials concluded that Arinc, the solar project’s contractor, had used the “wrong materials” and set the solar wi-fi poles up in the “wrong locations,” from where the solar panels could not receive the amount of sunlight necessary to give the batteries juice. Locals had also apparently complained about the poles themselves, as they were worried about the unsightly objects decreasing the value of their real estate.

However, the above case seems to be more of an issue of a contracting company messing up a good idea with bad execution. If a company managed to produce unobtrusively small solar wi-fi units and attached them to preexisting lampposts, could we embrace solar-powered internet then?

Researchers from The Australian National University, China’s Tianjin University and Silicon Valley company Chromasun are collaborating to create solar trough concentrators for rooftops that are cheaper and more efficient than previous models. True, this sounds like news we’ve all heard before—and on certainly more than one occasion—but the inter-continental scope of the project could expand and deepen solar power’s reach into budding and burgeoning markets alike.

Granted, China and the Silicon Valley are already fairly large markets for solar, each primarily using a different kind of solar technology (thermal/hot water in China, photovoltaic in California). And Australia currently boasts plans for seven solar cities. Yet concentrated solar power (CSP), which uses mirrors to concentrate sunlight into a high-powered beam then converted into a heat source, is too often the overlooked middle child of the solar technology family. It’s true that there have been some fairly high-profile concentrated solar systems—Nevada One or Spain’s PS10 solar power tower, for example. Nevertheless, awareness and demand for smaller—and therefore more residentially feasible—installations of solar trough concentrators aren’t as high as they are for PV or solar thermal systems. Concentrated solar systems currently carry high costs and insufficient demand, which means they have a while to go before commanding a huge fan (or, more importantly, user) base.

The ANU press release reports that the Australian government is providing $1.8 million to the Australian arm of the collaboration, as part of the Asia Pacific Partnership on Clean Development and Climate. The scientists hope to provide both emerging economies and budget-conscious potential adopters of solar power with more affordable, effective solar technology. And they’re looking not just to the Chinese market.

Whether it’s the fact that Congress finally passed the solar ITC extension, or just a happy coincidence, the news this past week has been chock-full of advances in solar technology and new solar panel installations.

In tech news, a new inverter from Advanced Energy Industries (AE) brings the efficiency of smaller inverters (over 97%) to utility-scale in a 500kw grid-tied model. And SCHOTT is unveiling a new 225w polycrystalline module at Solar Power International next week. (We’ll have to stop by and check it out.) A spokesman for the company says the new size was developed in direct response to customer requests. But perhaps the biggest news comes from a startup. Solyndra has burst onto the scene with $600m in funding and contracts for more than one billion dollars around the world. Why such a fuss? The company’s solar collectors are long tubes, in appearance closer to solar thermal collectors than traditional PV panels. The thin-film (CIGS) tubes collect the sun’s energy from the whole rounded surface, which means fewer of them are needed to do the same job as traditional panels. The company also claims that these are easier to install–time will tell how they hold up against standard solar panels.

So what else is going on? In Massachusetts, National Grid has proposed four sites for solar in and around metro Boston; if all the installations are okayed, customers of National Grid will pay for it by contributing about $.08/month. As one such customer, I’m just fine with that.

Bringing new weight to the term “energy security,” the US Army has announced a 500mw solar thermal installation at Fort Irwin in California’s Mojave Desert. The Army spends about $3 billion every year on energy, and this is only the first of many such steps towards energy independence.

Interested in making wine, not war? Constellation Wines, a division of the world’s largest beverage conglomerate, is installing a 1mw solar system at Gonzalez Winery in Monterey County, California, with assistance from the utlity PG&E. This is the largest solar panel installation at a winery not just in the States, but in the world, so far.

To close on a more sober note (sorry…had to), there may be troubled waters ahead for solar stocks. I should say, rather, that the waters will continue to be troubled, since it’s hardly been smooth sailing of late. The Associated Press quoted Goldman Sachs on the matter:

The risk of oversupply in the solar market will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market…We believe that liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future given fears of their ultimate cost in a bad world economy.

They conceded, however, that even if solar won’t be as good an investment in the future as it has been up to this point, it will still be better than many. And considering the inevitable shift towards greater reliance on renewable technologies, I think it’s safe to say that the long term outlook is safe from these temporary storms.

After being voted down no fewer than seven times by the House of Representatives (and ten in the Senate), the bill to extend renewable energy tax credits past 2008 has finally passed. President Bush has said he will sign the bill, so the future looks–well, sunny.

The bill maintains the 30% tax credit for commercial installations of eligible renewable energy technologies, like solar and wind, and does something of momentous importance to the average citizen: it continues to extend that 30% credit to residential customers while removing the cap of $2,000 the previous legislation had imposed. Up until now, if you wanted to install solar in your home and spent $40k on a system, you could only claim a $2k tax credit federally; now, you’ll be able to claim the full $12k. It’s a huge stride forward in encouraging residential adoption of renewables.

And it’s amazing news for utilities, which under the 2005 legislation were not able to benefit from this credit but now can. This will hopefully lead to utility-scale renewables finally finding purchase in states where the finances simply were not appealing when compared to tax breaks the utilities could get for developing coal, oil and gas. The news isn’t quite as good for wind, whose ITC’s were only extended for one year, as opposed to solar’s remarkable eight.

What changed the fate of this legislation, whose future looked so bleak not even a week ago? It got bundled into the emergency bailout legislation intended to alleviate our current financial crisis. It seems that the urgency of the bailout plan, along with its expectation that the parties would be doing everything in their power to find common ground, gave it just the push it needed to finally move forward. Divided along party lines as recently as Monday, Congress decided to go through with the $700 billion bailout due to the prevailing sense that the economy had no other effective route to recovery. On Monday, the vote was 228-205; today, it was 263-171. The Senate, after rewriting the bill to include the renewable energy legislation, passed it on Wednesday night by a wider margin of 74-25.

Visit the Solar Energy Industries Association (SEIA) to learn more about what this means for the solar industry in America. What we’ve been handed is the ability to maintain our competitive edge in the global solar market, and to pursue strategies of energy independence here at home.

And also–huzzah!

If you’ve been following the renewable energy tax credit’s epic journey through this nation’s two legislative chambers, you’ll know the industry’s hopes for an extension were dashed for the sixth time on Monday. If you’re just tuning in–bored of the financial mayhem elsewhere, perhaps?–take a look at Adam’s great recap from earlier this week.

The problem remains funding. The bill has received extensive bipartisan support, but there’s a line in the political sand firmly dividing Democrats and Republicans on the money issue. The Democrats want the tax credit extension to be fully paid for by reducing or closing out certain deductions for oil and gas companies. Senate Republicans have been quick to raise the “new tax” flag, but really, there is no new tax. Just fewer old tax breaks. Have a look at the list of funding sources, taken directly from the bill (available in PDF format).

• Sec. 401. Limitation of deduction for income attributable to domestic production of oil, gas, or primary products thereof.
  Sec. 402. Elimination of the different treatment of foreign oil and gas extraction income and foreign oil related income for purposes of the foreign tax credit.
  Sec. 403. Broker reporting of customer’s basis in securities transactions.
  Sec. 404. 0.2 percent FUTA surtax.
  Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax.
  Sec. 406. Nonqualified deferred compensation from certain tax indifferent parties.
  Sec. 407. Delay in application of worldwide allocation of interest.
  Sec. 408. Time for payment of corporate estimated taxes.

So decide how you feel about the funding for the tax credits based on the above. Some might say that with a deficit of over 9 billion dollars, maybe adding the roughly $18 million of the renewable energy tax credit extension is just a drop in the pond. Proponents of fully funding this bill, however, insist that it’s the fiscally responsible thing to do.

In a somewhat surprising move, the Senate has attached the provisions of the renewable energy tax credit bill to the economic bailout bill that being voted on (again) today. It’s difficult to say if this is an inspired idea, or if it’s just condemning the energy bill to the same resolution-less bickering the bailout is receiving. If that fails, HR 7060 won’t be up for another vote until mid-November at the soonest. As a roadblock to the bill’s passage has been President Bush’s threat of a veto if the funding provisions are left in, who knows if the bill will stand a chance (as is) until the new year, though. We’ll certainly keep you updated here at GetSolar.com.